NOTE 5. GOODWILL IMPAIRMENT

During the three months ended March 31, 2026 there occurred triggering events that gave rise to assess the carrying value of the Company’s two RUs that have goodwill balances.

The Brightline reporting unit (“BRU”) product customer is principally the U.S. Department of War (“DOW”). U.S. Government funding for new DOW projects that BRU was anticipating is on hold as a result of: 1) the U.S. Government shutdown in January 2026, 2) the Continuing Budget Resolution in February 2026 which produced no new funding, and 3) no formal passing of the U.S. Government fiscal year 2026 budget.

The budget delay above has resulted in BRU no longer being able to invoice its current primary DOW customer for work currently being done, material uncertainty regarding whether the current work will be funded in an ultimate U.S. Government budget passage and limited visibility regarding its ability to secure other future revenue contracts.

While revenues may be generated in the future, if the U.S. Government fiscal year 2026 budget or subsequent years budgets being approved or when the project is included in an approved budget in subsequent years, the current lack of sight into future revenue contracts and the Company’s inability to generate material revenues in the current fiscal year has removed the primary driver of the quantitative DCF modelling that is utilized in order to determine the enterprise value of BRU. This also makes the qualitative assessment of BRU’s technology challenging to assess. In accordance with our accounting policies (see Note 4), it has been determined that BRU enterprise value is negligible from a financial reporting perspective at the date of these condensed financial statements. This results in a total goodwill impairment to the BRU and the Company has recorded a goodwill impairment expense of approximately $10.56 million in the statement of operations for the three and nine months ended March 31, 2026.

In addition, the Glimpse Learning reporting unit (“LRU”) was reviewed for goodwill impairment in light of the Company’s going concern status (Note 2). LRU has historically been approximately cash flow neutral. Although Glimpse Learning remains a viable and continuing business, based on historical long cycle period to secure customers and limited visibility in renewing existing customer agreements, future cash flow sufficient to support enterprise value for LRU is uncertain. In accordance with our accounting policies (see Note 4), it has been determined that LRU enterprise value is negligible from a financial reporting perspective at the date of these condensed financial statements. This results in a total goodwill impairment attributable to LRU and the Company has recorded a goodwill impairment expense of $0.30 million in the statement of operations for the three and nine months ended March 31, 2026.